Wind farms reviewed as costs soar

But Meridian Energy says its Makara wind farm still looks promising.

Developers of wind farms are reviewing the costs of their projects following hot United States and international demand for turbines, driving up the costs of the machinery.

Genesis public affairs spokesman Richard Gordon said a 30 per cent rise in the international cost of wind turbines since Genesis started examining the Awhitu wind farm project 18 months ago was the critical reason for not going ahead.

The cost of the turbines was a large part of Awhitu's development costs. The fall in the New Zealand dollar making purchase costs higher had not been critical, he said.

Genesis had weighed up the costs against the potential electricity production of the farm and forecasts on wholesale electricity prices and concluded Awhitu would be uneconomic for the next 20 years.

At less than 20 megawatts, Genesis' wind farm is small compared to Meridian's proposed 70-turbine, 210mW wind farm at Makara, 20km out of Wellington on the windy south-west coast.

Gordon said Genesis would keep reviewing the economics. Under its resource consent it had to start construction of the wind farm within five years. The huge demand for turbines was driven by states of the United States subsidising wind farms, Gordon said. It was unclear how long that would last.

Meridian external relations adviser Alan Seay said Meridian was unlikely to axe its West Wind farm at Makara. It was expecting a decision from the Environment Court soon on the appeal against the wind farm.

West Wind was on a much larger scale than the Genesis wind farm. Meridian was buying turbines in bulk which would help the economics.

Seay said the higher cost of machinery might force up the price of the electricity from a wind farm.

"I wouldn't want to start speculating whether that would be the case with West Wind yet," Seay said.

Hawkes Bay electricity network company Unison, planning a big wind farm near Napier, said it was undertaking an assessment of its wind farm and would be making a decision in about six weeks whether to box on or hold off.

It was not clear how long the strong demand worldwide for turbines would last. Unison was planning to have the wind farm up and running by late 2008.

Unison's partner in the development was Roaring 40s, a company formed by Australian state power company Hydro Tasmania and China Light and Power. The cost of producing electricity from the wind farm was likely to be more than 8 cents a kilowatt hour.

Christchurch's NZ Windfarms says it has begun generating power at its Te Rere Hau windfarm.

First power was exported into the local power network from the site on August 29, Windfarms said.

All of the five Stage 1 towers were now erected, with three of the associated nacelles lifted into place, these were now undergoing commissioning.

Testing and commissioning work was expected to continue for the next few weeks.

NZ Windfarms will hold an open day for shareholders, plus its annual meeting, at the windfarm site. Prime Minister Helen Clark will also officially open the windfarm on the same day.